What’s behind the success of South African Airways?
It is through the infectious smile from the flight attendant as they warmly welcome the passengers boarding South African Airways flight from Munich to Johannesburg. Besides, the entire flight crew has high spirits that don’t provide the serious challenges in the future that the airways are facing.
The former CFO admitted that the organization’s balance sheet was weak. Even though, they have tried sobering the reality of the macroeconomics and financial position of the global airline industry. The airways are owned by the state and have the dual mandate where it’s supposed to sustain itself commercially and being the socioeconomic engine in the country. The two objectives always conflict where job preservation and prestige prevails over efficiencies and profits.
Despite it, saa flights is a victim of competitive pressures, geographical isolation, corruption, poor liquidity, an aging haul fleet, a week home currency, and the country’s sputtering economy. Even though the airline embarked on the long-term turnaround strategy.
Long-term turnaround strategy is a plan that is created by a business with a clear milestone that is set to achieve stability and commercial sustainability. Here, you will find the factors that are behind the success of South African Airways:
Pressuring The Leadership
South Africa airline is the leading carrier you will find in Africa. It serves 70 destinations and partners with Mango, SA Airlink, and SA Express. It has been operating on nine intercontinental routes and they have been shrinking in the past decade.
The airline is able to connect the homeland with other major tourism partners and therefore able to support more jobs. It is due to the pressure that makes the organization competitive at home and abroad.
For the past years, the country was full of racism and the airline was isolated. It was therefore denied the landing rights or fly over the air spaces in African countries. Besides all the obstacles, it was able to fly to the United States, Australia, and other points in Asia, Europe, and South America.
The airline was able to increase substantially through connectivity with the BRICS member states and urging of the government. The country plays a big role to provide the links with other countries that are moved by foreign policy instead of actual market need.
Focusing special on Africa
The country has increased frequencies to the key African destinations so that it can meet the demands. The country also plays a crucial role while trying to drive its economic development through an increase in aviation traffic.
Refreshing The Fleet
South Africa airline’s fleet is number 54 aircraft and mostly the Airbus types that they use on long-haul flights and others on long-haul operations. They were hurt in two ways where they absorbed liquidity when there was a need for cash and overpaying the market price where it paid it in terms of solvency.
Maintaining Quality Services
The media have questioned the liability of this airline. Despite that, Skytrax rated the airline 4-star for consecutive years as the best African’s line and best service staff that excels in their warm cabin hospitality.
Cost Reduction Plans
Along with some cost compression like supply chain contract negotiations, the country started cutting down the staffs by giving them voluntary severance packages and an early retirement. It is a target that is aiming to reduce their cost.
Overcoming The Challenges
There are risks that South Africa is facing as a nation and they include unemployment, corruption, political and social instability, and ailing infrastructure. The country is under significant pressure due to the country’s currency volatility and weakening that results in high cost of operation.
Even though, the economy might not change due to low demand of the country’s products in Europe and other internal pressures that result from corruption scandals and labor instability.
Despite all these impediments, the airline is pursuing aggressive expansion plans so that it can accommodate a higher demand for air travel from the growing middle class.
Some reasons make Africa optimistic and therefore projected to have an increase in the population for coming decades. These make the country’s airline to have opportunities for profits, although intercontinental will be a challenge.
So that to be a successful airline, the government must offer complete support and flexibility to the changes in the marketplace. For profitability, the meddling history must end and focus for the future. Besides, the success of airline must maintain a strong management team which will work closely with the government and responds to the competitive pressure that it might face.